Whither Chicago Economics?

The Chicago economics department views the world differently than anyone else, even other economics departments. Having learned my economics at Harvard and M.I.T., I took my first teaching job at Chicago with the very explicit idea that I would spend two or three years in Chicago to get to “know the enemy.” After I figured out how they thought, I would escape back to more comfortable surroundings.

Well two things happened that I didn’t expect. First, it turned out that it wasn’t so easy to learn to think like a Chicago economist. I’ve been trying to learn for more than a decade and I still have learned only the rudiments. Every day my colleagues teach me something I should know, but don’t. Second, I decided that the Chicago approach to economics was the right one for me, even though I am not that good at it.

I wish Levitt would elaborate on the differences between contemporary Chicago economics and the economics of Harvard, MIT, Princeton, and Stanford, because I don’t see any. The Chicago economics of 1970 or even 1980 was distinct from that of its East and West coast rivals. The Journal of Political Economy, and even more so the Journal of Law and Economics, had a unique style and approach. Chicago-influenced economics departments at UCLA, Washington, Texas A&M, Clemson, and elsewhere were disseminating (and deepening) the brand. But that’s all gone. It’s hard to see any unique vision today. Indeed, the diversity among US economics departments seems a thing of the past, as I noted before. They are all mini-MITs. How, exactly, is Chicago economics any different?

Joe, yes, yes, that was true 30 or 40 years ago. (Melvin Reder’s 1982 JEL article provides much more detail.) But it isn’t true today, as far as I can tell. Chicago economics does emphasize efficiency, but no more or less than any other branch of (mainstream) economics.

As a Chicago alumni (but not of the economics department), I have a bit of perspective that may throw some light on what Levitt likes about Chicago.

When one Nobel laureate is surrounded by a bunch of non-Nobel-winning colleagues, he or she is going to be naturally disinclined to engage in debate. First, everybody is going to be trying to score points on the Nobel laureate. Second, if not, everybody is going to be trying to suck up to the Nobel laureate.

When one Nobel laureate is surrounded by a bunch of other Nobel laureates, nobody really cares anymore what anybody else thinks, and they pretty much just say what they think.

That, in a nutshell, is why I think he likes Chicago.

As an aside, there are ways to foster a similar culture without requiring the Nobel as a membership credential. The law school at Chicago is much the same. Avoiding strong expressions of ideology seems to be a key issue. Once the discussion is about “us” vs. “them,” there isn’t much intellectual content to it anymore.